Non-controlling Interest

3 Months Ended

Mar. 31, 2020

3. Non-controlling Interest

Holdings is the sole managing member of RMCO and operates and controls all of the business affairs of RMCO. The ownership of the common units in RMCO is summarized as follows:




	March 31, 2020			December 31, 2019
	Shares	Ownership %		Shares	Ownership %
Non-controlling interest ownership of common units in RMCO	12,559,600	40.9	%	12,559,600	41.3	%
Holdings outstanding Class A common stock (equal to Holdings common units in RMCO)	18,123,963	59.1	%	17,838,233	58.7	%
Total common units in RMCO	30,683,563	100.0	%	30,397,833	100.0	%

The weighted average ownership percentages for the applicable reporting periods are used to calculate the “Net income attributable to RE/MAX Holdings, Inc.” A reconciliation of “Income before provision for income taxes” to “Net Income attributable to RE/MAX Holdings, Inc.” and “Net Income attributable to non-controlling interest” in the accompanying Condensed Consolidated Statements of Income for the periods indicated is detailed as follows (in thousands, except percentages):


	Three Months Ended March 31,
	2020									2019
	RE/MAX Holdings, Inc.			Non-controlling interest			Total			RE/MAX Holdings, Inc.			Non-controlling interest			Total
Weighted average ownership percentage of RMCO^(a)		58.9	%		41.1	%		100.0	%		58.6	%		41.4	%		100.0	%
Income before provision for income taxes^(a)	$	5,552		$	3,528		$	9,080		$	5,958		$	4,207		$	10,165
Provision for income taxes^(b)(c)		(2,921)			(869)			(3,790)			(1,549)			(359)			(1,908)
Net income	$	2,631		$	2,659		$	5,290		$	4,409		$	3,848		$	8,257

(a)

The weighted average ownership percentage of RMCO differs from the allocation of income before provision for income taxes between Holdings and the non-controlling interest due to (i) certain relatively insignificant expenses and (ii) the gain on reduction in TRA liability in 2020 attributable only to Holdings.

(b)

The provision for income taxes attributable to Holdings is primarily comprised of U.S. federal and state income taxes on its proportionate share of the pass-through income from RMCO. It also includes Holdings’ share of taxes directly incurred by RMCO and its subsidiaries, related primarily to tax liabilities in certain foreign jurisdictions. In the three months ended March 31, 2020, the provision for income taxes attributable to Holdings also includes a decrease in the value of deferred tax assets. See Note 10, Income Taxes for additional information.

(c)

The provision for income taxes attributable to the non-controlling interest represents its share of taxes related primarily to tax liabilities in certain foreign jurisdictions directly incurred by RMCO or its subsidiaries. Otherwise, because RMCO is a pass-through entity, there is no U.S. federal and state income tax provision recorded on the non-controlling interest.

Distributions and Other Payments to Non-controlling Unitholders

Under the terms of RMCO’s limited liability company operating agreement, RMCO makes cash distributions to non-controlling unitholders on a pro-rata basis. The distributions paid or payable to non-controlling unitholders are summarized as follows (in thousands):

f$
	Three Months Ended
	March 31,
	2020		2019
Tax and other distributions	$	14	$	55
Dividend distributions		2,763		2,638
Total distributions to non-controlling unitholders	$	2,777	$	2,693